Pensions

[Billloudon]

I listened yesterday to some guy on the tv saying that it's wrong for Gov. workers to get a final salary pension when most private workers don't. He went on to say these must be stopped.
I think we have missed the main point here. We should be aiming for ALL to get final salary pensions. Local Gov employment was set up as model employers for others to emulate. It's all too easy to say cut pensions and in some cases have no pensions at all. These are not true employers they are bleeding their workforce with the threat of possible redundancies.
If an employee works until they are of a pensionable age then he/she deserves to be guaranteed a reasonable outcome on retiral.
In fairness he did go on to say that the average private salary is greater than the public and perhaps this could be spent on better Pension schemes.
Ok rant over, sorry.

 

[Velorum]

If nothing is done about final pension schemes in the public sector then there wont be enough money to pay workers who retire in 15 - 20 years time. Contributers dont have a 'pot of money' in a pension fund they simply buy 'pension rights'. The money being paid out today comes from the contributions of people paying in now. Inevitably there will not be enough going into the system to pay an average of 40/80ths of the final years salary before retirement.

Sad but true.

 

[mr_cellophane]

In fairness he did go on to say that the average private salary is greater than the public and perhaps this could be spent on better Pension schemes.

Based on what ? As a greater percent of public sector workers are part time, the average pension is going to be less.
What is the comparison of average pension as a % of average pay ?

 

[Billloudon]

If nothing is done about final pension schemes in the public sector then there wont be enough money to pay workers who retire in 15 - 20 years time. Contributers dont have a 'pot of money' in a pension fund they simply buy 'pension rights'. The money being paid out today comes from the contributions of people paying in now. Inevitably there will not be enough going into the system to pay an average of 40/80ths of the final years salary before retirement.

Sad but true.

I wouldn't argue with that. should we accept the situation, blindly?
Should we be contributing more to safeguard our future and that of our families.

 

[Billloudon]

Based on what ? As a greater percent of public sector workers are part time, the average pension is going to be less.
What is the comparison of average pension as a % of average pay ?

This was on GMTV, I think.
I assumed the expert meant that rather than take the higher salary and get a lesser Pension it may be of advantage to those employees to increase contributions and achieve higher pension.
Employers are still walking away from this issue blaming anyone else who happens along.

 

[Flying Dodo]

In an ideal world we'd all be in final salary schemes. However, with more pensioners, increased longevity and lower assumptions for long term investment growth, unfortunately they simply aren't economically viable.

 

[ASC1951]

In fairness he did go on to say that the average private salary is greater than the public and perhaps this could be spent on better Pension schemes.

If he did, he was wrong. Average public sector full time pay is now about 10% more than private sector (although more public sector workers are part time).

From memory, public sector employees are just over 20% of the total adult workforce but account for just under 40% of pension liability. Although Velorum is right to say "The money being paid out today comes from the contributions of people paying in now", public sector pensions have a huge element contributed by the employer i.e. the taxpayer and it is that bit that is unsustainable.

If Billoudin wants everyone to have public sector type pensions, retire in their mid 60s and still live another 20 years, that can only be done by an enormous increase in general taxation or an enormous increase in personal pension contributions. Something around 20% of gross wages throughout your working life.

Unfortunately the realities of arithmetic are going to force big changes on pensions but neither politicians nor taxpayers are ready to admit it yet.

 

[Billloudon]

If he did, he was wrong. Average public sector full time pay is now about 10% more than private sector (although more public sector workers are part time).

From memory, public sector employees are just over 20% of the total adult workforce but account for just under 40% of pension liability. Although Velorum is right to say "The money being paid out today comes from the contributions of people paying in now", public sector pensions have a huge element contributed by the employer i.e. the taxpayer and it is that bit that is unsustainable.

If Billoudin wants everyone to have public sector type pensions, retire in their mid 60s and still live another 20 years, that can only be done by an enormous increase in general taxation or an enormous increase in personal pension contributions. Something around 20% of gross wages throughout your working life.

Unfortunately the realities of arithmetic are going to force big changes on pensions but neither politicians nor taxpayers are ready to admit it yet.

I want only the best for us. I go way out of my way not to accept inferior goods and this is significantly more important.
I do not question your 20% but does this include the employers contribution?

 

[gbb]

If he did, he was wrong. Average public sector full time pay is now about 10% more than private sector (although more public sector workers are part time).

From memory, public sector employees are just over 20% of the total adult workforce but account for just under 40% of pension liability. Although Velorum is right to say "The money being paid out today comes from the contributions of people paying in now", public sector pensions have a huge element contributed by the employer i.e. the taxpayer and it is that bit that is unsustainable.

If Billoudin wants everyone to have public sector type pensions, retire in their mid 60s and still live another 20 years, that can only be done by an enormous increase in general taxation or an enormous increase in personal pension contributions. Something around 20% of gross wages throughout your working life.
Unfortunately the realities of arithmetic are going to force big changes on pensions but neither politicians nor taxpayers are ready to admit it yet.

Which part of the public sector though ?
Several members of my family have worked, or do work in the public sector, albeit at the lower end. Their wages are very mediocre. It's alright at a managerial level, but the bulk of public sector workers are not very well paid..unless i'm way behind the times.
I suspect the pensions for managerial workers are very very good, that's where all the money goes. That's not a gripe against those that do benefit, just a fact as i see it.

I suspect 20% of your wages as contributuions is probably more realistic....but who can afford that when they're young, got mortgages, families etc etc. I know i couldnt. It's only as my kids have grown and flown, and my money becomes my own...that i can afford to put aside some reasonable amount towards my pension. Too late really of course, but better late than never.

And then, whatever type of pension you put into, you can be sure the goalposts will have moved by the time you get to draw it. It was always advised you opt out of SERPS...i stayed in. Now my plan shows i should get basic state pension, plus about the same again because i stayed in SERPS....plus whatever my private pension gives me.

In the end, the goverment only want you to contribute more, so they pay less in benefits...also they'll get some of your hard earned pensions back in tax.

My dad has his state pension, RAF pension plus his small private pension. He loses one of them in tax. He always says....why did i bother with the private element...i might as well not have bothered.

I'm always very cynical about pensions. Whatever they tell you now doesn't mean jack in 30 years time...so i dont get excited about it. Pay your dues and see whats there, when you get there.

 

[User482]

Wage comparisons are meaningless, unless you make them for like-for-like jobs. Anecdotally, I know that local authorities find it hard to retain good planners and engineers, because consultancy pays better